Beyond GDP

Jonny Hughes, Scottish Wildlife Trust's Director of Conservation writes on the dangers to the environment of being too focused on GDP as a measure of progress.

“In the past few decades, Gross Domestic Product (GDP) has become not just a measure of economic growth but also a proxy for societal progress. As such, it has become a hugely powerful driver of Government decision-making across all areas of policy. The consequences of chasing GDP growth whilst continuing to externalise environmental and social costs are stark; in the last 30 years the global economy has doubled while greenhouse gas emissions have risen by 40% (since 1990) and 60% of the world’s ecosystems have been degraded. It’s not making us any happier either, in 2006, before the current downturn, 60% of Europeans said life is getting worse.

Robert Kennedy famously said that: “Gross National Product measures everything except that which makes life worthwhile. Perhaps an exaggeration, yet it is true that oil spills, epidemics and unsustainable bubbles in the economy all help push up GDP, but are hardly good for us. Other economic commentators have echoed Kennedy’s view. Lord Turner, Chair of the UK Financial Services Authority has said we should “dethrone the idea that maximising GDP should be an explicit objective of economic and social policy.” The general public agree, with over 80% saying the Government’s prime objective should be happiness, not simply wealth.

Making GDP the dominant indicator of ‘progress’ has not proved a clever political strategy either, as Alex Salmond has seen with the demise of the Irish Celtic tiger he was so keen for Scotland to emulate. Now we are even seeing right of centre politicians like David Cameron and Nicolas Sarkozy bringing forward major initiatives which seek to measure the outcome we are after (well being), as opposed to one, rather flawed, means of getting there (GDP).

President Sarkozy’s initiative, began in 2008, was headed up by Joseph Stiglitz, former chief economist to the World Bank and a winner of the Nobel Memorial Prize for Economic Sciences. The key message to arise from the Stiglitz Commission was that “the time is ripe for our measurement system to shift emphasis from measuring economic production to measuring people’s well-being. And measures of well-being should be put in a context of sustainability.”

But how can we begin to make this shift and challenge the primacy of GDP? One solution might be to adjust GDP so it accounts for the, often massive, environmental and social costs not captured in GDP calculations. A simpler approach could be to consistently report two or three core progress measures alongside one another. An influential communication from the European Commission last year entitled ‘GDP and beyond’ recommended EU member states adopt exactly this kind of approach. Ultimately though, moving from a ‘growth for growth’s sake’ model to a sustainable development model for the economy will require some strong leadership and cooperation between Governments, and perhaps some less than superficial reporting of this vital agenda by the media.”

Jonny Hughes is Director of Conservation at the Scottish Wildlife Trust and a Non-executive Director of Scottish Environment Link

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